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Sandra Marcellus
Can years of pensionable service be purchased? How does purchasing service affect the amount of pension a teacher will receive?
The Teachers' Pension Plan Act allows teachers to purchase pensionable service for any leave approved by their school board, including parenting leave, sabbatical or a deferred salary leave plan. Teachers can also purchase substitute service after May 1971, periods of disability prior to 1992, and service they had previously withdrawn from the plan.
A teacher's pension depends on the teacher's salary and number of years of service. Prior to 1992, the cap on pensionable service was 35 years. Therefore, there was no pension benefit for teachers working longer than 35 years. Now there is no cap on post-1992 service. The more service a teacher has, the higher that teacher's pension will be.
Teachers who are currently members of ATRF and are accruing pensionable service can purchase service for board approved leaves as long as they are contributing active members immediately prior to the leave. Pensionable service can be purchased in total or in half-year increments; the minimum amount of service that can be purchased is one half year. Teachers can purchase any amount of service at the time they apply for pension.
Teachers currently active in the plan may purchase any amount of substitute service. The cost is subsidized by the Alberta government if the service is purchased in 186-day blocks (one year). Teachers who are not active plan members can only purchase 186-day blocks at the subsidized rate. As with other service, any amount of substitute service can be purchased at the time of pension application. No service can be purchased after pension commencement.
The cost of purchasing service varies depending upon the amount that service will increase the teacher's pension, the teacher's age, current pensionable service and current annual salary. These values are determined as of the date of purchase, not the date of the leave. To determine if it is worthwhile to purchase service, teachers need to get two pension estimates: one that includes the purchased service and one that does not. They then need to determine how much it would cost to purchase service. At this point, teachers can compare the benefit of purchasing service with the cost of the service. Teachers are now able to make these calculations easily from ATRF website. Go to www.atrf.com and click on On-Line Services. Teachers can also get assistance in these calculations by calling the ATRF office at
(780) 451-4166 in Edmonton, or 1-800-661-9582 toll free in Alberta.
Some tax laws do apply to the purchase of pensionable service. For more information on purchasing service, see the ATRF Plan Member Guide.
